Welcoming a new baby to your family is an exciting time. Along with the anticipation, many parents-to-be worry about expenses and financial planning challenges that come with a new child. While discussions usually focus on the health of the mother during pregnancy and childbirth, a recent conversation with my colleague Ignatius D’Anna, who is expecting his first child with his wife, Kate, provided a new perspective on what fathers and partners should consider when preparing for a child’s arrival.
I interviewed Ignatius, who goes by Iggy, about his thoughts as a first-time dad and a seasoned wealth adviser.
Kara: I know you and Kate are thrilled, and perhaps a little nervous, about welcoming your baby and everything that will change in your lives — and your financial situation.
Iggy: This is an extremely exciting time in our lives, and numerous personal and financial considerations must be balanced as we prepare for our firstborn. I hope our conversation supports those contemplating the monetary impact of becoming new parents.
Kara: When you and your wife discovered you were expecting, how did you both approach the initial conversations about this significant life transition?
Iggy: It all starts with open communication, allowing us to have meaningful discussions around what’s important to each of us and our family. Much of the planning began before we even got the news, as we regularly discuss our goals, values, and vision for our lives and marriage. Through monthly family meetings, we address essential personal and financial topics, which naturally guided our planning and organization.
In this situation, my wife is doing all the heavy lifting, and my goal is to be a supportive partner by taking on responsibilities outside of carrying and delivering the baby.
Kara: From a financial perspective, where did you begin?
Iggy: There is a lot to consider, and we needed to prioritize action items. The simplest way to approach this was to separate short-term from long-term planning topics.
Initially, we wanted to review our budget and plan for adjustments. Although it might not be the most enjoyable task, it’s crucial to understand where your money flows. The cost of raising a child is often one of the largest financial commitments in our lifetimes.
If you’re not already tracking your budget, numerous resources can simplify the process. I personally utilize an online budgeting tool alongside a spending plan worksheet. This website allows me to link all my bank, investment accounts, debit cards, and credit cards to automatically track transactions in a straightforward manner.
After that, I export the data to the spending plan worksheet — the same one I use with my clients — to project expenses for the next three to six months and monitor our progress.
Kara: What budget considerations did you and your wife review while projecting cash flow during Kate’s pregnancy and post-baby arrival?
Iggy: The immediate impact involved planning for upcoming medical visits, lab tests, and other lifestyle adjustments. The biggest consideration now is planning for three of us instead of just two. Additional costs include healthcare, medical expenses, childcare, diapers, formula, and all the baby gear that seems to invade every nursery and car space.
We explored ways to reduce our existing expenses while introducing these new categories to accommodate our growing family. We maintain a six-month emergency fund in our liquid savings account to ensure these new expenses are covered.
Kara: Parental leave is a significant topic when planning for a new baby. How did you plan for parental leave?
Iggy: First, I recognize not everyone has access to parental leave, so we’re grateful for the benefits provided by our employers. The key for us is balancing our personal lives with our careers. We began by scheduling conference calls with our HR representatives to gather information about our options and formulate a game plan.
We reviewed my wife’s parental leave options alongside how short-term disability plays a role in our timeline and planning. Two critical questions we addressed were how long leave is available and whether it is paid. In Kate’s case, her short-term disability covers 60% of her salary, so we are considering this reduced income in our cash-flow projections.
While it’s vital for my wife to bond with and care for our newborn, I feel a responsibility to remain accessible for my clients and team. Our company’s generous parental leave program allows me the flexibility to manage emails, make phone calls, and hold client meetings while technically on leave.
This balance of time off and remote access is crucial for bonding with our newborn without neglecting my responsibilities to clients.
Kara: How about employee benefits beyond parental leave — like health insurance for the baby?
Iggy: Understanding health insurance for a new baby and selecting the best option was essential. Both my wife and I have health insurance through our respective employers, so we compared plans to assess the pros and cons of adding the baby to either plan.
First, we evaluated costs and checked which healthcare providers would be in-network. While cost is a significant factor, it’s also essential to have access to a trusted pediatrician who comes highly recommended.
Most insurance plans typically have a 30- to 60-day window to add your newborn post-birth, so contacting your insurance provider ahead of time is beneficial to determine what information they need, like your child’s name, date of birth, and birth certificate.
Kara: Any other considerations you think would be helpful for parents preparing for a newborn?
Iggy: It was crucial for us to assess our situation comprehensively and ensure we have a robust support system during this transition. It could include family, close friends, or even outsourced help like a housekeeper or childcare provider. Personal finance becomes truly personal in this context, as it must suit your family’s dynamics.
Many significant questions arise: Are both parents returning to work? Will one become a stay-at-home parent? What are the pros and cons of each choice, and what’s the opportunity cost associated with either decision?
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